Private examinations

Document Cited authorities (5) Cited in Related
AuthorMark Watson-Gandy
Pages407-427
Chapter 28


Private Examinations

OBJECTIVE

The court has the power to assist a liquidator in his investigations into a company’s assets and affairs.1The court may, on the application of the office-holder, summon to appear before it:

ƒ any officer of the company;
ƒ any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company; or
ƒ any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.

The court can order the respondent to:

ƒ give evidence by witness statement; ƒ answer interrogatories
ƒ produce documents;
ƒ submit to an oral examination.

If the respondent fails to attend or there are reasonable grounds for thinking he will abscond, the court can issue a warrant for his arrest, have his books, papers, money or possessions seized and (if he absconds or there is a real likelihood of him absconding) have him held in custody until the hearing.

The information sought must be necessary in the interests of the winding up and producing this should not be unfair and oppressive to the respondent.2As to what is ‘necessary’, the views of the liquidator ‘are normally entitled to a good deal of weight’.3

APPLICATION

To seek relief, the liquidator or provisional liquidator or administrator must make an application in accordance with rule 12.18 of the Insolvency (England and

1Section 236 of the Insolvency Act 1986.

2Re British & Commonwealth Holdings (No 2) [1993] AC 426.

3Sasea Finance v KPMG [1998] BCC 216 at 220.

408 Corporate Insolvency Practice

Wales) Rules 2016, the requirements of which are listed under the key statutory provisions of this chapter. The application should be returnable to the registrar or district judge.

Care should be taken to ensure that the relief sought is specific and clearly identifies what is to be done.

The application must be accompanied by a brief statement of the grounds upon which it is made.4The application can be made without notice;5however, this should only be done where there is good reason for doing so.

The respondent should be the person the office-holder is seeking relief against.

COURT FEES

Where fresh proceedings need to be brought, a court fee of £280 is payable.6If the application can be made as part of exisiting proceedings and the application is on notice to other parties, a court fee of £155 is payable.7Where the application is made by consent or without notice in existing proceedings, a court fee of £50 is payable.8

SERVICE

The application should be served personally unless the court orders otherwise.9

Conduct money should be paid for any person who is to be examined.10

The usual rule is that, subject to any other express provision, the application must be served at least 14 days before the date fixed for the hearing.11However, the court does have power, in cases of urgency, to hear an application immediately with or without notice to the other parties.12

Service may be effected personally13or by post in accordance with the rules on postal service under Part 6 of the CPR.14Service on a person may be effected by

4Rule 12.18 of the Insolvency (England and Wales) Rules 2016.

5Rule 12.18(2) of the Insolvency (England and Wales) Rules 2016.

6Paragraph 3.5 of Schedule 1 to the Civil Proceedings Fees Order 2008.

7Paragraph 3.12 of Schedule 1 to the Civil Proceedings Fees Order 2008.

8Paragraph 3.11 of Schedule 1 to the Civil Proceedings Fees Order 2008.

9Table of requirements of service of Schedule 4 to the Insolvency (England and Wales) Rules

2016.

10Rule 12.22(4) of the Insolvency (England and Wales) Rules 2016.

11Rule 12.9(3) of the Insolvency (England and Wales) Rules 2016.

12Rule 12.10(1) of the Insolvency (England and Wales) Rules 2016.

13Rule 1.44 of the Insolvency (England and Wales) Rules 2016.

14Paragraph 1(2) of Schedule 4 to the Insolvency (England and Wales) Rules 2016.

service on that person’s solicitor, if they are authorised to accept service on that person’s behalf.15

WITNESS STATEMENT/GROUNDS

This should state:

ƒ the applicant’s capacity (why the applicant has locus to make this application);

ƒ what role the respondent played in the company;
ƒ whether the respondent is under a duty to co-operate16(and, if so, why);
ƒ precisely what it is sought that the respondent is to do (thus if documents are to be produced identifying those documents);
ƒ why the applicant wishes to have the information or documents sought to assist him in the performance of his functions;
ƒ why it is believed that the respondent has the information or documents sought;
ƒ what steps have been taken to encourage the respondent to provide that information and documents voluntarily;
ƒ why the respondent’s reaction to those steps has made the application necessary.

FIRST HEARING

The hearing will be in chambers unless the court directs otherwise and will be before a registrar or district judge. The applicant may be represented by counsel or by solicitors.17

Where an order is made for the attendance of the respondent before the court, the order must specify a time, date and place for examination not less than 14 days from the date of the order.18

Where evidence by a witness statement is ordered, the court will specify the matters to be addressed. Where documents are to be produced, the documents will be identified and the time and manner of compliance will be specified.

15Rule 1.40 of the Insolvency (England and Wales) Rules 2016.

16See section 235(3) of the Insolvency Act 1986 for the list of persons under a positive duty to cooperate with an office-holder.

17Rule 12.20(1) of the Insolvency (England and Wales) Rules 2016.

18Rule 12.19(1) and (2) of the Insolvency (England and Wales) Rules 2016.

410 Corporate Insolvency Practice

RETURN DATE

On the date fixed for the examination, if it appears to the court that any person has property of the company, the court may, on the application of the office-holder, order the delivery of the property or money to the office-holder.19

WARRANT FOR ARREST

If the respondent fails to attend at the appointed time for his examination, without reasonable excuse, or there are reasonable grounds for belief that the respondent has, or is about to, abscond to avoid his attendance, the court may issue a warrant for his arrest and for the seizure of any books, papers records, money or goods in his possession.20The court may also authorise him to be kept in custody until he is brought before the court.21

KEY STATUTORY PROVISIONS

Sections 235 to 237 of the Insolvency Act 1986

235 Duty to co-operate with office-holder

(1) This section applies as does section 234; and it also applies, in the case of a company in respect of which a winding-up order has been made by the court in England and Wales, as if references to the office-holder included the official receiver, whether or not he is the liquidator.

(2) Each of the persons mentioned in the next subsection shall—

(a) give to the office-holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may at any time after the effective date reasonably require, and

(b) attend on the office-holder at such times as the latter may reasonably require.

(3) The persons referred to above are—

(a) those who are or have at any time been officers of the company,
(b) those who have taken part in the formation of the company at any time within one year before the effective date,

19Section 237(1) and (2) of the Insolvency Act 1986.

20Section 236 of the Insolvency Act 1986.

21Section 236 of the Insolvency Act 1986.

(c) those who are in the employment of the company, or have been in its employment (including employment under a contract for services) within that year, and are in the office-holder’s opinion capable of giving information which he requires,

(d) those who are, or have within that year been, officers of, or in the employment (including employment under a contract for services) of, another company which is, or within that year was, an officer of the company in question, and

(e) in the case of a company being wound up by the court, any person who has acted as administrator, administrative receiver or liquidator of the company.

(4) For the purposes of subsections (2) and (3), ‘the effective date’ is whichever is applicable of the following dates—

(a) the date on which the company entered administration,
(b) the date on which the administrative receiver was appointed or...

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